Insurance premium in US stands at $1.4 trillion. 52% life health and 42% casualty. That is approx 9% of GDP. Figures are at 12.5% for UK, 10.5% for Japan. Indian insurance market approx. at $30billion and 3% of GDP is smaller than even Taiwan. So still there is lot of room for growth. The FDI in insurance sector is just 10% as of now, still enough scope for more investments to come before they reach the proposed cap of 49%. So in figures, things look good.
Now if we look subjectively, from where the growth will come from?
Along with FDI, you will also see the influx of insurance products from developed world. SME sector, is still vastly untapped for employee group insurance. With hospital boom coming up and happening, do you think they are banking upon only patients who can pay. Not really these fore sighted med companies know that, with the growth of medical insurance, they are bound to get more customers (patients), These med companies will push hard along with medical insurance companies to bring in some innovative and cheaper insurance products for huge Indian middle class.
So insurance sector still remains in nascent stage and lot need to be done. This is one game, which still have lot of juice in it.
However I personally is worried about ULIPs, insurance agents in India, keep pushing ULIPs harder and harder, because they get more commission by selling these plans rather than ordinary insurance plans.
Imagine if a new private company gets flow of redemptions now when these ULIPs have bleed ed and recent rally was not enough to break even the prices. Ordinary Indian does not know about the risks associated with these equity linked plans. So here government need to do something, I would say government should reform the commission paid to insurance agents and be more strict , so that commission should not decide what agent sells. It should be the need of customer, what should decide it.
Overall it is still a story will long journey and lots of action.
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